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Delhi Airport Metro Express Pvt Ltd (DAMEPL), a subsidiary of Anil Ambani-led Reliance Infrastructure Ltd (RInfra) which withdrew from Airport Express Line metro project in 2013, has been awarded a compensation of ₹2,950 crore from the Delhi Metro Rail Corporation Ltd (DMRC) .
The compensation award, which is one of the largest domestic arbitration awards ever, has been granted to Reliance Infrastructure on the basis of termination provisions of the concession agreement with DMRC by a three-member arbitral tribunal’s unanimous decision.
After four years of arbitration process, the tribunal constituted from a panel nominated by the DMRC held the termination of the agreement by DAMEPL as valid and approved some of its claims.
According to the RInfra statement, the compensation award covers damage occurred from the breach by DMRC of its obligations under the concession agreement and material adverse effect on the ability of DAMEPL to perform its obligations under this agreement.
Commenting on the tribunal’s decision, RInfra spokesperson said the company “welcomed the award and hope it will encourage private sector to participate in the nation building process”.
Speaking on condition of anonymity, a source close to the matter told BusinessLine that apart from the awarded claim of ₹2,950 crore, there is also an interest of around ₹1,765 crore that DMRC will have to pay RInfra.
As per the concession agreement, the interest is payable from the date of termination of the agreement, which is August 2013, in this case.
Receiving a total amount of around ₹4,725 crore could be good news for RInfra as it will help the company reduce its consolidated debt of ₹25,000 crore by around 19 per cent.
Even if DMRC challenges the award which it is likely to do, according to the sources, the state-owned company will still have to pay 75 per cent of the award amount as per the CCEA approved guidelines issued by NITI Ayog in 2016.
“Since the interest is running, DMRC is likely to take a decision quickly,” a source said.
DMRC spokesperson told BusinessLine the company is studying the award given by the arbitrators and will decide the further course of action in the matter after due deliberations.
The Airport Express Line that connects Connaught Place and Delhi International Airport is the first Metro project implemented under the Public Private Partnership (PPP) arrangement.
The concession agreement was signed in 2008 and commercial operations started in 2011.
A year later, RInfra raised issues of financial non-viability of the project and requested for project re-structuring, which was rejected by DMRC leading both partners to arbitration. The project was taken over by DMRC in July 2013.
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